B.C. Economic Growth Forecasts Strengthen

August 26, 2005

VICTORIA – The independent Economic Forecast Council has improved its economic growth outlook for British Columbia, Finance Minister Carole Taylor said today.

In a July survey, the Economic Forecast Council improved its outlook for B.C. compared to its previous forecast in January. The Council now expects the province’s economy to grow 3.6 per cent this year, up from its January forecast of 3.3 per cent. The forecast for 2006 also increased to 3.4 per cent from 3.1 per cent. While the forecast strengthened, the Council does not expect B.C. to duplicate its 2004 performance of 3.9 per cent growth.

“Our independent forecasters are telling us that B.C. continues to see a lot of positive momentum across sectors of the economy,” said Taylor. “While they don’t expect us to repeat last year’s performance, it’s good to hear our economy is performing better than expected. That will continue to generate new jobs and opportunities for British Columbians.”

Council members cited continued strong growth on the domestic side of the economy as the main reason for the improved outlook. Retail sales, non-residential investment and employment are performing better than expected in January. The trade sector is also expected to post stronger results. The impact of the higher Canadian dollar appears to be less severe than earlier anticipated and stronger commodity prices should provide additional support to B.C.’s exports.

Over the medium-term from 2007 to 2009 the Council now forecasts annual growth of 3.3 per cent, up from 3.0 per cent in their January survey.

Risks noted by the Council include the strength of the Canadian dollar, slowing U.S. housing markets, the potential for weakening global economic growth, and the impact of construction labour shortages and rising costs on infrastructure development.

“B.C.’s economic performance is a key underpinning of our three-year fiscal plan. Commodity prices are always volatile and these economic risks remind us that we need to remain prudent, to continue investing in our province, and to manage these challenges so we can sustain the opportunities created by a strong economy.”

The Budget Transparency and Accountability Act requires government to seek the advice of the Economic Forecast Council prior to finalizing the September Budget Update, which will be tabled on September 14. The Council is comprised of 13 economic experts from various banks and private sector forecasting groups.
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